Mortgage Rates Unchanged after FOMC Minutes

Mortgage rates ended the day very close to unchanged, following what was a supportive reading of the Fed's April Meeting Minutes. The big, nasty surprise that may have been lurking (potential rate hike arguments for June) was instead ruled out. The Fed noted that many members agreed that the economy was not likely to make a strong enough case for a June rate hike. That said, neither did the Minutes suggest the Fed was reevaluating their general game plan of hiking in the 2nd half of 2015, exactly what I have been saying for the past several weeks and as late as yesterday in my blog.

The FOMC minutes had absolutely nothing in them that has not been beaten to death over the last month. Some may want to keep on talking about it, but I do not have anything to add.

As I have noted recently, the 10yr and MBSs are settling in a new higher interest rate range (lower prices for MBSs). Now it is back to current economic data. Tomorrow will be a big day - weekly claims and the April existing home sales. Tomorrow also has the May Philadelphia Fed business index.

The Federal Reserve is on a path never travelled, and it shows when we look at the Fed in general. Listen to speeches of any Fed official and a headache will ensue. Take this to the bank, for all the talk and economic theories floating now, no one can rely on assumptions based on history before 2008. On truism for economic forecasts, whatever the conclusion, it has to start with an assumption, these days there is no reliable history to base an assumption on. Never have central banks become so involved in controlling markets with their purses.

In summary, we did not get any surprises from the FOMC minutes other than a June rate hike is most likely off the table. One major driver of the current trend in rates is what is going on in Europe. The analysis seems to rely solely on Europe - and as the yields in Europe rise, they do the same here in the US. Until we see clear evidence rates are moving lower, momentum still remains with rising rates.